INCOME TAX ACT, 1961

Section 115JB

MAT - Book profit under section 115JB - Treatment of profit from sale of agriculture land -

Assessee-company sold agricultural land and earned gain on the same. Since the land was not capital assets by virtue of provisions of section 2(14)(iii), thus the said gain was not taxable, which was also accepted by AO. However, the AO opined that the gain on sale of the land was taxable under the provisions of section 115JB. Held: Agriculture land sold by assessee was held by it for more than 9 years as investment and such land was situated in rural area more than 17 kms away from Municipal Limit. Further, such land was used for agricultural purpose and considering the location of the land, in near future also, it could not be used for non-agricultural purposes. Further, the AO himself accepted that the land was an agricultural land out of definition of capital assets. Thus, by virtue of definition of agricultural income given under section 2(1A) read with Explanation 1, the income arising from the transfer of such land was agricultural income. Hence, the profit from sale of agriculture land, which was not a “Capital Asset”, could not be included for the purpose of computing book profit under section 115JB.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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